Schwab as a successor trustee

[dcp6904]

Background. I am still alive. Maybe five years left. Now looking to name successor trustee for daughter’s $5M trust (All cash and securities plus a mortgage note.)

This topic has already been discussed (by trust originators who were still alive), but they could not share experiences on SPECIFIC, day-to-day, functional issues such as Schwab acting as trustee in their absence… like interacting with an estate’s personal representative.

Would be nice to hear from beneficiaries rather than those who created the trusts.

Do you think current trust management fee of .5% on first $5M for BOTH portfolio management AND all trust administration is only a “teaser” rate? My local bank is 1% on first million PLUS hourly rate for administration.

Seeking feedback from those who have ACTUAL experience with Schwab Trust Company. Who have several years of statements, several years of fees and several years of interactions with staff.

Specifically, I am wondering about:
1. Timely preparation of trust tax return. (Do they do this in-house?)
2. Response to phone inquiries about tax return, distributions, etc. from beneficiaries.
3. Clarity of statements…are fees easily identified?
4. Are earnings easily seen?
5. Comments from a borrower (on mortgage note) dealing with Schwab in making payments and eventually paying it off and getting deed in return. Any REAL experience with this… is there someone on staff at at Schwab who will know how to handle this or is it jobbed out to an attorney?

Thanks a million!
Dave in Wisconsin

[Careful]

Good questions. I’d love to know too.

That does seem like a good rate. I’ve seen one percent plus.

[bsteiner]

Conventional banks and trust companies generally charge about 1%, a bit more on smaller trusts, and less on larger trusts.

I don't know about Schwab, but Vanguard charges 0.55% on the first $5 million, and less above $5 million. A few clients have named Vanguard as a trustee in their Wills but none of them has died yet, so I don't know how it will work out.

[afan]

The boglehead Gill, lawyer and CPA who spent his career in bank trust departments, named Vanguard as trustee. He did the sort of deep dive into their operations that only an expert could perform. He concluded that Vanguard was run in a way with which he was comfortable. Considering the source, that opinion is worth following.

I have not seen him comment on Schwab as trustee.

He has said that some large banks and trust companies charge too much and neglect accounts.

If we are lucky, maybe he will jump on this thread.

From other trustee discussion,ls, it seems Vanguard has a relatively limited range of services that it will perform as trustee. Gill thinks that they will do the things that most trusts need. Apparently there are complicated situations that require high expertise in rare circumstances.that Vanguard would not handle. My impression is that Gill thinks that al least some higher cost trustees will do those jobs. They will charge very high fees. If you do not have such a trust, then, and again this is my interpretation of what Gill has said, you could waste money paying for services you do not need. Maybe even get worse service for the relatively simple things you do need.

[HomeStretch]

Welcome to the forum!

I can’t answer your excellent questions but we will likely be in a similar position (leaving sizable Trusts for our children).

It seems fees are inevitable for professionally managed Trusts. I have come to the conclusion that I’d rather the Trust pay a 1% fee to a professional Trust admin company (with its own internal successors for who handles the Trust) than to try to do it cheaply with a non-professional and aging individual family member, friend or lawyer.

With respect to naming a successor Trustee, have you considered naming your daughter when she reaches a certain age as a co-trustee with the successor trustee? And giving your daughter the power of appointment in case she runs into any serious issues with the other Trustee? Spouse and I will do this in order to give our children some power in case the successor Trustee becomes unsuitable as their Trusts are likely to be in place for a long time.

I read on this forum that Vanguard as a Trustee will not manage real estate and perhaps other types of investments so depending on your assets that you plan to pass in Trust, they may or may not be able to manage everything.

[toddthebod]

Seeking feedback from those who have ACTUAL experience with Schwab Trust Company. Who have several years of statements, several years of fees and several years of interactions with staff.

Specifically, I am wondering about:
1. Timely preparation of trust tax return. (Do they do this in-house?)
2. Response to phone inquiries about tax return, distributions, etc. from beneficiaries.
3. Clarity of statements…are fees easily identified?
4. Are earnings easily seen?
5. Comments from a borrower (on mortgage note) dealing with Schwab in making payments and eventually paying it off and getting deed in return. Any REAL experience with this… is there someone on staff at at Schwab who will know how to handle this or is it jobbed out to an attorney?

Thanks a million!
Dave in Wisconsin

I can give you some limited feedback as a beneficiary of a trust held at Schwab, although my siblings are still the trustees: Schwab set me up with "view only" access to the trust account. This allows me to see everything that happens in the account as if it were my own, I just can't make trades or move money. I get the same monthly statements, I can see the 1099, etc. That should address questions 3 and 4 at least.

As far as number 2, this is Schwab's best feature. You and the beneficiaries will have a personal rep who will answer the phone, respond to emails, and will put you in touch with someone who can answer the questions they can't. I was assigned a rep when my parents set up the trust, and I eventually moved everything over from E*Trade because the customer service was without comparison.

While we don't use them, their personal trust services documentation does say the 0.5% fee includes "standard domestic tax return preparation and filing."

[dcp6904]

Thank you, toddthebod

How long is your relationship with Schwab Trust Company?

I know that trust management is now a priority of theirs.

Wondering how new this effort is...??

Wondering if trust fees (now .5% on first $5M) will go up once they build their client base....?

Schwab's fees for wealth management are much higher (and for less work... ie. no administration duties). Wealth management (for folks that are alive) are about .75% for the first $5M.

Thanks, Dave in Wisconsin.